Adnoc Hail and Ghasha awards imminent

03 October 2023
MEED previously reported that frontrunners had emerged for the offshore and onshore EPC packages of the estimated $10-15bn sour gas field development project

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Abu Dhabi National Oil Company (Adnoc) is understood to have selected contractors for the engineering, procurement and construction (EPC) work on its Hail and Ghasha sour gas field development project, estimated to be valued between $10bn and $15bn.

The formal contracts are expected to be issued by Adnoc “imminently”, according to sources.

The official contract ceremony could take place during the ongoing Abu Dhabi International Petroleum Exhibition and Conference (Adipec), sources added.

In late August, MEED reported that frontrunners had emerged for the offshore and onshore EPC packages of the Hail and Ghasha project.

A consortium of Abu Dhabi’s National Petroleum Construction Company (NPCC) and Italian contractor Saipem is understood to be the favourite to win the offshore EPC package, sources told MEED at the time.

Italy-headquartered Tecnimont is understood to have emerged as the frontrunner for the onshore EPC works.

The Abu Dhabi energy giant started a fresh EPC tendering round for the Hail and Ghasha project in late April, just days after cancelling the pre-construction services agreements (PCSAs) it signed with contractors in January.

Contractors expressed interest in participating in the latest Hail and Ghasha EPC tendering round by 19 May, MEED previously reported. Adnoc has since been in negotiations with contractors for the offshore and onshore EPC packages of the Hail and Ghasha scheme.

Adnoc had earlier declined to comment on MEED’s request for information on the matter. An Adnoc spokesperson told MEED: “Adnoc and our international partners remain committed to delivering the gas mandated from the Ghasha concession. We do not comment on market speculation.”

Execution of EPC works

The new expression of interest document issued by Adnoc on 29 April details its latest EPC execution strategy for the Hail and Ghasha development. Under these plans, the offshore and onshore scope of work has been divided into three packages:

  • Package one: Subsea pipelines, umbilicals, cables, risers and other offshore structures
  • Package two: Offshore drilling centre facilities, the Ghasha offshore processing plant and central living quarters
  • Package three: The Manayif onshore processing plant, including offsite export pipelines and tie-ins, utilities, the main control building and process buildings. Work on a Ruwais sulphur-handling terminal and other non-process buildings is an optional scope for this package.

It remains to be seen if Adnoc adheres to this strategy and awards three contracts or integrates the EPC works into an offshore and onshore package.

Hail and Ghasha fields

The Hail and Ghasha fields, along with the Hair Dalma, Satah, Bu Haseer, Nasr, Sarb, Shuwaihat and Mubarraz fields, are located in Abu Dhabi’s offshore Ghasha concession.

Adnoc holds the majority 55 per cent stake in the Ghasha concession. The other stakeholders are Italian energy major Eni with 25 per cent, Germany’s Wintershall Dea with 10 per cent and Austria’s OMV and Russia’s Lukoil, each with 5 per cent.

Adnoc plans to produce more than 1.5 billion cubic feet a day of sour gas from the Ghasha concession by the middle of this decade. This target is aligned with the company’s broader goal of achieving gas self-sufficiency for the UAE by 2030.

In November 2021, Adnoc and its partners in the Ghasha concession awarded two EPC contracts for the Dalma offshore sour gas development project. Abu Dhabi’s NPCC and Spain-headquartered Tecnicas Reunidas won contracts worth $1.46bn to execute offshore and onshore EPC works on the Dalma project, respectively.

Four artificial islands have already been completed in the Ghasha concession, and development drilling is under way.

In addition, Adnoc awarded two contracts totalling $2bn to its subsidiary Adnoc Drilling in July last year for the Hail and Ghasha offshore sour gas field development project.

The awards comprise a $1.3bn contract for integrated drilling services and fluids, and a $711m contract to provide four island drilling units. Their duration is 10 years.

Adnoc also awarded a third contract, valued at $681m, to another subsidiary, Adnoc Logistics & Services, to provide offshore logistics and marine support services for the planned Hail and Ghasha development.

PCSAs cancelled

The PCSAs signed in January with two consortiums, comprising three contractors each, marked the start of detailed engineering work and procurement of critical long-lead items for the offshore and onshore scope of work on the Hail and Ghasha development.

A consortium of France-headquartered Technip EnergiesSouth Korean contractor Samsung Engineering and Tecnimont was awarded the PCSA for the onshore package. The contractors revealed the value of the contract to be approximately $80m.

Saipem, NPCC and state-owned China Petroleum Engineering & Construction Company (CPECC) won the PCSA for the offshore package, worth $60m.

Previously, the onshore work on the Hail and Ghasha scheme involved the construction of a gas process plant, pipeline network and new gas gathering units.

The offshore PCSA covered installing offshore platforms, gas compression facilities and more than 400 kilometres of subsea pipelines.

The reason for these PCSAs being annulled is unclear, but sources said the cost estimates submitted for the project were higher than Adnoc’s overall budget.

Protracted project timeline

The cancelled PCSAs were part of an early engagement process with contractors that Adnoc started following the termination of at least two earlier bidding rounds.

US engineering firm Bechtel completed the project’s original front-end engineering and design (feed) in 2019, with tenders for four EPC packages issued soon after.

Following the submission of commercial bids in early 2021, Adnoc made revisions to the feed as part of an optimisation process started by Technip Energies in November 2021. The revised feed aimed to reduce the scheme’s overall capital expenditure, which was previously estimated to be as high as $15bn.

The four original EPC packages were consolidated into two integrated offshore and onshore packages, thought to be worth as much as $5bn and $5.5bn, respectively, based on the previous version of the project.

MEED reported in September last year that early engagement contractors had submitted proposals for the detailed engineering work on the Hail and Ghasha development. The January PCSAs are understood to have been issued based on these proposals.

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